Evaluation of safety stock methods in multilevel material requirements planning (MRP) systems

This paper evaluates alternative methods of establishing the safety stock l evel taking into consideration of historical measures of forecasting accura cy and the needs for master production scheduling and material requirement planning under a rolling time horizon. A computer model is used to simulate the forecasting, master production scheduling and material planning activi ties in a company that produces to stock and the production activities are managed by multilevel MRP systems. The simulation output is analysed to eva luate the impact of safety stock methods on MRP system performance. The res ult of the study shows that using safety stock can help to reduce total cos t, schedule instability and improve service level in the MRP systems. Guide lines are developed to help managers select methods to determine safety sto ck in MRP system operations.